Rio Tinto Cautious But Still Upbeat About 2010 - CEO

8th Jul 2010 21:00

LONDON (Dow Jones)--Global diversified miner Rio Tinto PLC (RTP) is cautious but still upbeat about 2010, despite current volatility in the global economy, the company's chief executive said Thursday. "While we remain cautious on the outlook, 2010 is shaping up well from Rio Tinto's perspective," Tom Albanese said at a Melbourne Mining Club dinner in London. Most of Rio Tinto's operations continued to run flat out in the first quarter and the International Monetary Fund is forecasting global growth of nearly 4% this year and in 2011, with Chinese economic growth expected at about 9%. "Growth at these levels would have positive implication for metals and minerals markets," Albanese said. But the markets remain volatile due to nervousness about a possible double-dip recession in countries that belong to the Organization For Economic Cooperation and Development, and due to the Chinese government's push to curb inflation by moderating economic growth. "Asian countries are contending with inflationary risks arising from substantial stimulus packages that were put in place last year. In particular, China's efforts to prevent overheating will have some negative effects on our markets," he added. Looking further ahead to 2015, the outlook for commodities remains rosy, Albanese said. Firstly, developing countries such as China and India are undergoing a process of industrialisation and urbanisation which will continue to drive demand for commodities, he noted. Secondly, substantial economic imbalances between developed and developing countries need to be resolved. Developed countries will be under pressure to reduce public and private debt, while China is expected to begin a move toward reduced dependence on exports and investment in order to fuel economic growth, he said. "This combination of factors suggests a higher than average growth setting for our markets. But it will be characterised by elevated volatility and scope for discontinuities - making a pattern we call the 'saw-tooth' economy," he added. Albanese predicts the path ahead will be dominated by strong growth, and trends that will be hard to predict. "There will be a secular rise from China, and the emerging economies, punctuated by higher volatility triggered by structural dislocations in the OECD countries. This volatility won't be like the old business cycle, but more like what we have all experienced, over the last two years," he added. Albanese noted that despite near term concerns about the pace of China's economic growth, demand for metals imported by China has kept prices above historical averages. Company Web site: www.riotinto.com -By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; [email protected] (END) Dow Jones Newswires July 08, 2010 16:00 ET (20:00 GMT)